Embed Size (px)
Citation preview
INVESTOR PRESENTATIONOctober 2019
1
Owned Brands
Licenses
Innovations
®
®
®
DISCLAIMER
2
The information contained in this presentation is provided by Welspun India Limited (the “Company”), although care has been taken to ensure that the information in this
presentation is accurate, and that the opinions expressed are fair and reasonable, the information is subject to change without notice, its accuracy, fairness or completeness is not
guaranteed and has not been independently verified and no express or implied warranty is made thereto. You must make your own assessment of the relevance, accuracy and
adequacy of the information contained in this presentation and must make such independent investigation as you may consider necessary or appropriate for such purpose. Neither
the Company nor any of its directors assume any responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information or opinions contained
herein. Neither the Company nor any of its directors, officers, employees or affiliates nor any other person accepts any liability (in negligence, or otherwise) whatsoever for any loss
howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.
The statements contained in this document speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or undertaking to
supplement, amend or disseminate any updates or revisions to any statements contained herein to reflect any change in events, conditions or circumstances on which any such
statements are based. By preparing this presentation, none of the Company, its management, and their respective advisers undertakes any obligation to provide the recipient with
access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent.
This document is for informational purposes and does not constitute or form part of a prospectus, a statement in lieu of a prospectus, an offering circular, offering memorandum, an
advertisement, and should not be construed as an offer to sell or issue or the solicitation of an offer or an offer document to buy or acquire or sell securities of the Company or any
of its subsidiaries or affiliates under the Companies Act, 2013, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, both
as amended, or any applicable law in India or as an inducement to enter into investment activity. No part of this document should be considered as a recommendation that any
investor should subscribe to or purchase securities of the Company or any of its subsidiaries or affiliates and should not form the basis of, or be relied on in connection with, any
contract or commitment or investment decision whatsoever. This document is not financial, legal, tax, investment or other product advice.
This presentation contains statements of future expectations and other forward-looking statements which involve risks and uncertainties. These statements include descriptions
regarding the intent, belief or current expectations of the Company or its officers with respect to the consolidated results of operations and financial condition, and future events and
plans of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” or words of similar meaning. Such forward-looking
statements are not guarantees of future performance and actual results, performances or events may differ from those in the forward-looking statements as a result of various
factors and assumptions. You are cautioned not to place undue reliance on these forward looking statements, which are based on the current view of the management of the
Company on future events. No assurance can be given that future events will occur, or that assumptions are correct. The Company does not assume any responsibility to amend,
modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events, or otherwise.
Any reference herein to "the Company" shall mean Welspun India Limited, together with its consolidated subsidiaries.
INTRODUCTION TO WELSPUN GROUP
3
Global Leader in
Large Diameter Pipes
Global Leader in
Home Textiles
Infrastructure
Investments in Oil & Gas
Employees
25,000+
Fixed Asset Base
US$ 0.9 Billion
Group Revenue
US$ 2.7 Billion
AGENDA
1. Welspun India: An Introduction
2. Industry Overview
3. Welspun India: Key Differentiators
4. Key Strategic Initiatives
5. Welspun 2.0 & Way Forward
4
AGENDA
5
WELSPUN INDIA:
AN INTRODUCTION
WELSPUN INDIA: OVERVIEW
6
Trusted and Preferred Suppliers to
17 of Top 30
Global Retail Giants
Ranked #1
among Home Textile Suppliers
to USA
by Home & Textiles Today magazine
5 Times in Last 6 Years
Largest
Home Textiles Company Globally(1)
With presence in
Bed, Bath & Flooring
Every 5th Towel
Every 9th Sheet
sold in the US is made by Welspun(2)
Presence in
50+ Countries
Note: (1) Based on consolidated revenues from Home Textiles segment. (2) Based on OTEXA CY2018 data. (3) FY19 Figures
30 Unique innovations
38% Sales: Innovative Products(3)
17% Sales: Branded Products(3)
3E’s of Corporate
Social Value
Education, Environment & Health,
Empowerment
KEY MILESTONES
7
20101995
Set up Vapi, Gujarat
facility for Towels
1993
Embarked upon
Capacity
Expansion &
Vertical
Integration
2014
Began the
journey in
Textiles
1985
Acquired Christy – most
prestigious brand of
towels in the UK
2006
Launched:
Brand ‘SPUN’ globally
‘Hygro’ branding campaign
in the US
2015
Commissioned India’s largest
Spinning facility under one roof
2016
Entry into Rugs
2008 20172012
Ranked No.1 Home
Textile exporter to
the US
FY 2005
Set up Anjar, Gujarat
facility
Entry into bedsheets
2018
Established industry
defining, patented
traceability solution:
Wel-Trak®
Revenues (Rs. Bn)CAGR 14%
(2008-19)
61
53
32
16
4.51.3
2018201520122008200519951985
Began
Operations
FY 2019
2019
Foray into:
- Flooring Solutions
- Smart Textiles
Increasing footprint in
Middle East, Japan,
Australia, EU
Launched value brand
“Welspun”
Flooring business
commenced
operations
66
68.5%
8.3%
10.2%
0.6%12.4%
68.5%
8.6%
8.1%
1.8%
13.0%
Shareholding Pattern
Market Statistics
As on September 30, 2019 INR USD
Price per share 52.65 0.74
No of Shares outstanding (Mn) 1,005 1,005
Market Capitalization (Mn) 52,899 748
Daily Average Trading Volumes (Q2 FY20) No of shares in Mn 0.60 0.60
Daily Average Trading Value (Q2 FY20) (Mn) 31.53 0.45
Mar 31, 2019 September 30, 2019
Promoter
FIIs
Mutual Funds / AIF
Banks and Insurance Cos
Public
8Source: BSE & NSE
SHAREHOLDING AND TRADING SNAPSHOT
AGENDA
9
INDUSTRY OVERVIEW
10
ASIAN DOMINANCE IN HOME TEXTILES
Source: WTO - 2018 report, Texprocil, OTEXA
India 5%
China 35%
India 6%
China 37%
India 12%
China 36%
Textiles
Textiles &
Apparel
Home Textiles
US$ 811 bn
US$ 318 bn
US$ 48 bn
11
GLOBAL MARKET OPPORTUNITY
Global Home Textile Market
(USD Bn)
US and Europe are the major end markets
comprising a 75% of the home textile market
Indian Players have concentrated in US because:
US is a large and homogenous market making it
a more attractive market to target first
While US is a level playing field, Europe provides
preferential tariff rates to some competing
countries
48
80
2017 2025E
Wholesale Level
145
242
Retail Level
Market Composition
Europe 44%
US 31%
Row 25%
Source: OTEXA, Industry Reports & Articles (Wazir Advisors)
US Home Textile Market (2018)
(USD Bn)
US Home Textile Market
valued at c.$15 bn
Strong Presence of India Next Opportunity for India
COTTON PILLOWCASES,
$0.3 COTTON SHEETS, $1.4
COTTON TOWELS, $1.6
COTTON BEDSPREADS ,
$1.0
MMF FLOOR COVERINGS, $4.0
OTHER COTTON PRODUCTS, $3.0
OTHER NON-COTTON
PRODUCTS, $5.0
India continues
to dominate the
US Towel
Market
12
INDIA- LARGEST PLAYER IN US MARKET
Market Share in US Towel Market
Market Share in US Sheet Market
Half of the US
Sheet Market is
served by India
Source: OTEXA, YTD August 2019
9 percentage pts
23 percentage pts
27%
48% 49% 50% 50% 50%
29%
23% 21% 20% 22% 21%26%
16% 15% 15% 16% 18%18%13% 14% 14% 13% 11%
CY2009 CY2015 CY2016 CY2017 CY2018 YTD2019India China Pakistan ROW
30%
38% 40% 39% 39% 39%
23% 25% 23% 24% 25% 25%22% 22% 22% 21% 20% 21%
24%
15% 15% 16% 16% 15%
CY2009 CY2015 CY2016 CY2017 CY2018 YTD2019India China Pakistan ROW
13
4 5 6
Largest
Producer of
Cotton
Strong Political
Leadership
with Supportive
Policies
Strong Domestic
Market
Potential
Global
Manufacturing
Scale
Favourable
Socio-Economic
Factors
Competitive
Costs
FACTORS CONTRIBUTING INDIA’S COMPETITIVE ADVANTAGE
AGENDA
14
WELSPUN INDIA:
KEY
DIFFERENTIATORS
Diversified Brand
Portfolio
WELSPUN INDIA: GLOBAL LEADER IN HOME TEXTILES
15
Leading Market Player
with a Wide Product
Range
1
Global Distribution
Network with Marquee
Clients
4
Sustainability at the Core
of the Business
6
Experienced Board and
Management with Proven
Track Record
7
Consistent focus on free
cash flow
8
Vertically Integrated
Presence with Significant
Capabilities
2
3
Track Record of
Innovation
5
16
LEADING MARKET PLAYER WITH A WIDE PRODUCT RANGE 1
Widest product range in the Home Textiles segment
Towels, Bath
Robe
Sheets, TOB, Basic
& Fashion Bedding
Carpets, Rugs,
Flooring Solutions
A differentiated End-to-end Solutions Provider in Home Textiles
Uniquely positioned for cross-selling due to Customer reach, Competitive
manufacturing, Global delivery model
Higher wallet share due to multi-product portfolio
Strong track record of customer satisfaction and repeat business from them;
80% revenue from replenishment
16%
23%
CY13 CY18
41%
50%
CY13 CY18
LEADING MARKET PLAYER
17
1
Welspun’s Market Share in US Towels Market
Source: OTEXA
Welspun’s Share in India’s exports to US - Towels Welspun’s Share in India’s exports to US - Sheets
Ranked No.1 supplier to the US 5 times in last 6 years by Home & Textiles Today magazine
Every 5th towel sold in US is made by Welspun Every 9th sheet sold in US is made by Welspun
15%
19%
CY13 CY18
7%
11%
CY13 CY18
Welspun’s Market Share in US Sheets Market
18
Growing Capabilities FY19 Effective Utilisation:
Towels : 88%
Sheets : 82%
Rugs : 70%
Capex of around Rs. 4.6 bn
in H1 FY20
FY20 capex expected at
Rs. 6 bn
Cotton Spinning Weaving Processing Cutting & Sewing Logistics
India Supply
AdvantageVertically Integrated Facilities Across Manufacturing Chain
Current integration of about 70% in Spinning and Weaving
Captive power generation
Welspun India’s backward integration has helped improve margin, better quality control and timely delivery
4550
60
7280 80
FY14 FY15 FY16 FY17 FY18 FY19
Towels (‘000 MT)
5560
72
90 90 90
FY14 FY15 FY16 FY17 FY18 FY19
Bed Linens (‘Mn mtrs)
68 8
10 10 10
FY14 FY15 FY16 FY17 FY18 FY19
Rugs & Carpets (‘Mn sq. mtrs)
VERTICALLY INTEGRATED PRESENCE WITH SIGNIFICANT CAPABILITIES2
Captive Power
GLOBAL DISTRIBUTION NETWORK WITH MARQUEE CLIENTS
19
3
Delivery and Reach in Over 50 Countries
Country Served
Corp HQ/Marketing Offices
Manufacturing Facility
Warehouses
DIVERSIFIED BRAND PORTFOLIO
20
4
Spectrum of Welspun Brands: Continue to Evolve
Premium &
LuxuryInnovation
Sustainability &
Empowerment
Coveted Licenses
Branded Products Contribution to Sales at 17% in FY19
Value
®
®
TRACK RECORD OF INNOVATION
21
5
• 38% of Sales from Innovative Products
• 30 unique inventions filed globally
• Contributes more than $180 Mn of Sales annually
• Gaining traction in hospitality & domestic market
• Received Asthma and Allergy Free Certification
for bedding products in US post stringent testing
Global
Collaboration
on Innovation
Top Universities
Technology Partners
Industry Associations
30%34%
36% 37% 38%
FY15 FY16 FY17 FY18 FY19
Increasing Share of Innovative Products
The Innovative & Branded products account for more than 45%
of revenue
HYGROCOTTON®
Regulates temperature for individual comfort
before washing after 3 washings
• Constitutes 3% of total revenue
®
®
22
SUSTAINABILITY6
23
INCLUSIVE GROWTH: CORPORATE SOCIAL VALUE6
ENVIRONMENT.
EMPOWERMENT.
EDUCATION.
Our initiative to improve the quality of education at
schools serves over 55 schools, 500 teachers and
10,000 students in Gujarat.
Welspun 2.0, Spun centers, Smart Villages are
empowering the women in Gujarat to lead the way to
economic independence and growth.
Sustainable business practices, clean water, improved
sanitation and development of green spaces within the
communities.
Supporting
Sportswomen
69 Medals won through Welspun Super Sports
Program since April 2019.
Partnership with sports agency – Meraki Sports
EXPERIENCED BOARD & MANAGEMENT WITH PROVEN TRACK RECORD7
24
B.K.Goenka, Chairman
• Amongst India’s most dynamic businessmen
• Ranked amongst India’s Most Powerful CEO by Economic Times
• Emerging Company of the Year Award in 2008
Arun Todarwal, Independent Director, Audit Committee Chairman
• 20+ years of experience in Finance, Audit, Taxation and Quality
Management. Member of ICAI, practicing since 1981
Ms. Anisha Motwani, Independent Director
• 28+ years experience in advertising, auto-manufacturing, financial and health
services. Currently advisor to World Bank. Voted among ‘50 Most Powerful
Women in Indian Business’ by Business Today for 3 consecutive years
Pradeep Poddar, Independent Director
• Technocrat & Corporate Leader with 30+ years of experience in consumer
products industry and vast experience in brand building
Arvind Singhal, Independent Director
• MBA from University of California, founded Technopak, India’s leading
management & operations consulting firm with focus on Textiles, Retail,
Healthcare etc
Shalil Mukund Awale, Nominee Director
• Chief GM at IDBI Bank with nearly 22 years covering areas like Priority
sector, Retail Banking, Investment & Treasury, Venture Capital Finance,
Audit
Board of Directors
Rajesh Mandawewala, Managing Director; Member of Board
• In-charge of textile business; instrumental in growing reach over 50 countries
• 25+ years of experience in industries varying from Textiles to SAW pipes.
• He is a Qualified chartered accountant
Ms. Dipali Goenka, CEO & Joint Managing Director; Member of Board
• Driving force behind textile business, successfully led development of two brands
– SPACES and Welhome
• Graduate in Psychology & completed Management Programm from Harvard
Altaf Jiwani, CFO (Welspun India)
• 25+ years experience in corporate finance roles across diverse industries.
• Worked with RPG Group for 19years. Last role as CFO, Phillips Carbon Black
Ms. Manjari Upadhye, CEO (Domestic Retail Business)
• 17+ years of experience across the consumer products industry; Significant
contribution in brand building for FMCG companies
Mukesh Savlani, CEO (Welspun Flooring)
• Home-grown CEO with 17+ years experience in various roles at Welspun;
Engineering graduate; Leadership Program from Harvard
Ravi Panicker, Head (Christy)
• 26+ yrs experience in Retail Sales, Ecommerce & Category
• Previously worked with Raymond, Bombay Dyeing among others
Michael Mullen, Sales Head – US
• 26+ yrs experience in Business Development, Sales & Merchandising & E-
Commerce
• Previously worked with Keeco, Home Express, Mervyn's and E & E Co
Management Team
AWARDS & ACCOLADES – TESTIMONY TO EXCELLENCE
25
Asia’s 50
Power
Businesswoman
Dipali Goenka
Featured at #16 in
Asia’s Top 50 Power
Businesswomen (2016)
and many more….
STP Water
Recycle & Reuse
Platinum Award
Water Stewardship
(2018)
Marketing
Marketing Services Award
“Spaces”
(2018)
7
GIGA GURU status from
Walmart for Sustainability -
2019
SustainabilityHighest Exports
Winner of
1 Platinum, 2 Gold & 1
Silver Trophies
(2018)
Social Media
Digital / Social Media
Campaign of the Year
Christy
(2018)
FCF positive for five consecutive years
26
795
3,770
859 907773714
2,405
785 786 787
FY15 FY16 FY17 FY18 FY19
Rs.
in M
illio
ns
FCF Dividend
8 CONTINUED FOCUS ON FREE CASH FLOW
*Net Profit for FY17 & FY19 is adjusted for exceptional items; CAGR is based on FY13-FY19
27
Total Income
CAGR 10%EBITDA
CAGR 10%
Net Profit*
CAGR 11%
Cash Profit
CAGR 14%
TREND OF FINANCIAL PERFORMANCE8
36,965
44,772
54,924 60,143
67,211 61,318
66,084
35,682
FY13 FY14 FY15 FY16 FY17 FY18 FY19 H1FY20
Rs.
m
illio
n
2,248
4,195
5,398
7,365 6,979
3,850 4,242
3,486
FY13 FY14 FY15 FY16 FY17 FY18 FY19 H1FY20
Rs.
m
illio
n
6,438
10,253
13,691
16,831 16,639
12,046 11,467
7,746
FY13 FY14 FY15 FY16 FY17 FY18 FY19 H1FY20
Rs.
m
iilio
n
4,178
6,237
9,017
12,074
9,131 9,413 8,977
6,112
FY13 FY14 FY15 FY16 FY17 FY18 FY19 H1FY20
Rs.
m
illio
n
AGENDA
28
KEY STRATEGIC
INITIATIVES
Welspun’s patented Wel-Trak® process,
supplemented by scientific traceability from Oritain™,
is now the industry defining end-to-end fiber tracking process.
29
WELSPUN’S PATENTED GLOBAL COTTON INTEGRITY PROCESS
- Verifies fiber from the origin and at every stage of production
- Ensures rigorous process control of fiber’s physical parameters
- Authenticates cotton from dedicated sources
- Assures independent third party testing
- Allows consumers to track fiber in product back to the farm where it was produced
®
®
SMARTSOURCING: ASSET LIGHT FUTURE GROWTH
30
Collaboration with
Suppliers for Lead Time
Reduction via Exclusive
Set-up of Welspun
Ancillary Units
Assured
Supply
Lower
transportation
costs
Lower inventory
Lower Interest
cost
Recycling of
packaging
SYNERGISTIC BENEFITS
• Already Established Ancillaries
• Spinning
• Trims
• Packaging materials
Omni-Channel Support
to Top Global Retailers
via Product
Development,
Warehousing, Pick and
Pack, Drop-Ship and
Analytics
SCM Analytics for Our
Customers
31
AGENDA
32
WELSPUN 2.0
& WAY FORWARD
WELSPUN INDIA: VISION 2022
33
+ +
Innovation Brands Sustainability
Women
Employees
20%
Share of Domestic
Revenue
20%
Revenue
$1.5bn
Innovative / Branded
Revenue Share
50%
Net Debt
NIL
New Channels /
MarketsNew Products
++
1 2 3 4 5
INNOVATION & PATENTS
34
1
Focus on expanding innovative & patented products portfolio offering
®
®
29
Our patented technology leverages hollow
core yarn for the ultimate in temperature
regulating sheets and absorbent towels
that get fluffier after each wash.From sports towels to bed sheets that
aren’t washed as often as they should be,
charcoal woven into our fabrics provides
natural odor control benefits.
CHARCOAL
This poly material is ultra soft
to the touch and dries super
fast to create an ideal bath rug.
DRYLON
HYGRO
BEFORE WASHING AFTER 3 WASHINGS
Welspun’s proprietary supply chain
transparency program. We’ve
partnered with Oritain™ to have
complete supply chain transparency
from farm to shelf.
WEL-TRAK™
The trusted provider of organic
sheets and towels for top
retailers.
ORGANIC
active
patents.
Sustainable blend of Cellulosic fibre:
Naia™ sourced from wood & recycled
polyester. Ensures long-lasting color
and retains vibrancy. Easy to care &
exquisitely soft and comfortable
SUPER CELLUSOSE
BRANDS : CHRISTY
35
2
Introduced the brand in US, China and Middle East; witnessed healthy growth
Coveted Associations like Wimbledon, Rugby World Cup and Royal Ascot
Christy Brand Reinvigorated & Launched Globally
A 150-Year Old
Legacy.. ‘Living
Redefined’
Brexit uncertainty has impacted sales in recent quarters
However, UK retail appears to have bottomed out
Welspun working on improving efficiency across business, optimising retail
operations & increasing focus on B2B business
BRANDS : SPACES
36
2
India – one of the fastest growing economies in the world with huge
potential for increasing organized market
‘Spaces’ was recently recognized as a best brand in home category
by Myntra. Also, received Amazon Marketing Services Award for
Spaces
Presence in 200+ shop-in-shops
Licenses for Domestic Market:
Focus on tapping Domestic Market potential
The Next
Growth Engine
Redesigned Brand Strategy
Use of 360 degree marketing approach by increasing customer
touch points including social media, POS, in-store, PR news, TV,
outdoor, radio, customer service.
Revisited Spaces brand campaign
BRANDS : WELSPUN
37
2
Value brand ‘Welspun’: Focus on tapping a larger segment of the domestic market
Reaching Larger Audience
IPL: Official Partner of Kings XI
Punjab
Election TVC on News Channels Campaign at Kumbh Mela
Outdoor AdvertisingCampaign starring Amitabh Bachchan
SA 8000 Certified Operations for Socially Responsible Practices
STP Installed with a Capacity to Process 30 million Liters Per Day; 85% treated water used
at plant
68 million KWH energy saved in CY2018 (Equal to 80,000+ household energy
consumption per month)
Reduced 6 million tons of CO2 emissions by logistics efficiency
1,200+ Women Engaged Across 10 Vocational Centers; 10,000+ Youth Trained via
Welspun’s Skill Development Program
38
Saved 6,920 million Liters of recycled water in CY2018 (Equal to New York City Water
consumption for 5 years)
SUSTAINABILITY IN EVERYTHING THAT WE DO3
NEW MARKETS
39
4
United States:
62-65%
Europe:
18-20%
India:
6-7%
RoW:
9-10%
Presence in Japan, the Middle
East, Australia, Russia and
South Africa
Presence in Europe is limited because:
• Pakistan, Turkey, Egypt and
Bangladesh have preferential tariff
rates from EU, exempting them from
import duties
• Welspun’s focus on EU has been
more recent, mainly through its
innovative products
Continue to gain market share in the US
Home Textile market and grow its US
business in the medium – long term
• Welspun India to focus on increasing
presence in subscale / new markets
• Non-US business is likely to account
for larger share of incremental
revenue going forward
Future StrategyComposition of Sales (FY19)
• Indian Urban Home Textile market
is expected to grow from INR
257bn in 2016 to INR 438bn by
2021 (i.e. CAGR of 11.25%)
• Government’s Policy on ‘Housing
for all by 2022’ to boost domestic
consumption
• Implementation of GST to
accelerate move towards
organised sector
NEW CHANNELS : E-COMMERCE
40
4
In key developed markets, E-commerce constitutes 10-15% in Home Textiles. Expected to reach ~25% by FY23
Welspun approach to tap the Ecommerce opportunity
Own WebsiteBig-Box Retailers’
Websites
Key Ecommerce
PlatformsExclusive Online
D2C Players
• More than 10% sales of
Christy in UK is own
website/exclusive online
• Establishing own brands’
presence across key
markets
• Focus on capturing value
on the Company’s own
portal
• Strong relations with
existing big-box retailers
• Selling through online
channels of these retailers
• Omni Channel support to
retailers on Product
Development, Warehousing,
Pick and Pack, Drop-Ship
and Analytics
• Warehouses in US, UK,
Germany and India
• Key Ecommerce players
increasing share of private
labels to capture more
value, cater to increased
volumes and to have better
control
• Focus on being a preferred
sourcing partner for these
key ecommerce platforms’
private labels
• Home Textile startups
penetrating D2C channels
• Looking at significant
minority stake in select
ventures as a strategic
investor
• Partnering to create
brands and tap D2C
channels
Welspun sees Omni-channel as an opportunity
NEW CHANNELS : HOSPITALITY
41
4
Welspun only constitutes ~3% of total US hospitality market
Opportunity
- The US hospitality market is c. $1.5bn (i.e. for towels and sheets)
- Welspun’s revenue from this segment is c. $50mn indicating huge growth potential
High potential global wellness economy of about $3.7 trillion
-- Welspun has partnered with Stay Well to tap global wellness potential
-- Stay Well infuses wellness into hotel rooms with features and programs to maximise the guest experience and minimise the
impact that travel has on the human body
Strategy
Focus on domestic as well as international markets
Tied up with leading hotel chains and wellness centers
NEW PRODUCTS : FLOORING SOLUTIONS
42
5
Welspun Flooring: Fully integrated flooring vertical
- Aim to become a one-stop flooring solutions provider for domestic and
international markets
- Facility located in Telangana
- Expected investment is ~Rs. 11 billion
- Capacity of 27 million sq. metres p.a
- Commenced operations with effect from September 13, 2019
- 42 distributors and ~450 dealers have been appointed so far pan-India.
Wide range of Flooring products
Carpet Tiles Broadloom Carpets
& Area Rugs
Artificial GrassLuxury Performance
Tiles (LPT)
43
FLOORING – EXPORT OPPORTUNITIES OPENING UP
Source: Floor Covering Weekly, July 22, 2019
Carpet and Area Rugs
43%
Resilient Flooring*21%
Ceramic Floor & Wall Tile
14%
Hardwood13%
Stone6%Laminates
3%
*Resilient Flooring includes:
LVT (13%), Vinyl Sheet & Floor
Tile (7%) & Others (cork,rubber,
etc) (1%)
U.S. Flooring Industry: $27.2 Billion
5
China leads in LVT manufacturing
with an 81% market share in the
US market
With US imposing 25% tariff on Chinese products, significant
export opportunity has opened up for other countries
Resilient category has seen the fastest growth with a CAGR of
5.3% from $1.9 billion in 1996 to $5.6 billion in 2017
NEW PRODUCTS
44
5
Untapped Opportunity in Bedding
• Large untapped opportunity in basic bedding, comforters and quilts
• Currently, China dominates the market; India is gradually making inroads
• Contributed ~3% of sales in FY19
1
Technical / Advanced Textiles2
• Products for specialized use in healthcare, fire departments, aerospace, defense, automobile, railways and other utilities.
• These products include specialized features such as fire retardants, stain resistant, anti-bacterial, PET resistant, and soil resistance, among others.
• Contributed ~3% of sales in FY19
RAISING THE BAR
MOVING TOWARDS VISION 2022
Volatile raw
material costsRising energy costs Volatile Rupee
Differentiation
Strategy :
Innovation,
Branding &
Sustainability
Industry Defining
Traceability
Solution
Focus on
Domestic Market
New Product
LinesNew channels
45
®
AGENDA
46
KEY HIGHLIGHTS &
FINANCIALS
47
KEY HIGHLIGHTS – Q2FY20
Prepaid term loans of
Rs. 2,842 mn
Awarded ‘Vendor of the year’
for sustainability by Macy’s
Emerging business grew by
30% YoY
Roped in Amitabh
Bachchan as brand
ambassador; Launched
‘Badal dalo’ campaign
EBITDA Margin at 22.0%,
higher 424 bps YoY
Profit after Tax close to
Rs. 2 bnROE 24.0%
ROCE (pre-tax) 16.8%
Flooring business –
Commenced operations
‘Rangana by Spaces’
grew 74% YoY
(Rs. Million)
•* Cash Profit = PBDT (before exceptionals) less Current Tax
•** EPS not annualised
48
FINANCIAL PERFORMANCE – Q2 FY20 / H1 FY20
Particulars Q2FY20 Q2FY19 YoY
Change Q1FY20
QoQ
Change H1FY20 H1FY19
YoY
Change
Total income 18,371 17,978 2.2% 17,363 5.8% 35,682 33,756 5.7%
EBITDA 4,034 3,186 26.6% 3,712 8.7% 7,746 6,437 20.3%
EBITDA Margin 22.0% 17.7% 424 bps 21.4% 58 bps 21.7% 19.1% 264 bps
Finance Cost 336 369 -9.1% 374 -10.2% 709 712 -0.3%
Depreciation 1,145 1,083 5.7% 1,094 4.6% 2,239 2,142 4.6%
PBT (before exceptional) 2,554 1,734 47.2% 2,244 13.8% 4,798 3,584 33.9%
PAT (After Minority Interest) 1,985 1,148 72.9% 1,500 32.3% 3,486 2,420 44.0%
Cash Profit* 3,366 2,435 38.2% 2,746 22.6% 6,112 4,876 25.3%
EPS** (Rs.) 1.98 1.14 72.9% 1.49 32.3% 3.5 2.4 44.0%
(Rs. Million)
49
FINANCIAL PERFORMANCE TREND
* Cash Profit = PBDT (before exceptionals) less Current Tax
** Adjusted for stock split, EPS not annualized for H1FY20
Particulars FY15 FY16 FY17 FY18 FY19 H1FY20
Total income 54,924 60,143 67,211 61,318 66,084 35,682
Growth % 22.7% 9.5% 11.8% -8.8% 7.8% 5.7%
EBITDA 13,691 16,831 16,639 12,046 11,467 7,746
EBITDA Margin 24.9% 28.0% 24.8% 19.6% 17.4% 21.7%
Depreciation 3,329 3,718 5,054 5,042 4,358 2,239
Finance cost 2,829 2,368 1,583 1,408 1,593 709
PBT (before exceptional) 7,533 10,745 10,003 5,597 5,516 4,798
Exceptional Items - - (4,648) - (2,647) -
PAT (After Minority Interest) 5,398 7,365 3,576 3,850 2,098 3,486
Cash Profit* 9,095 12,074 9,131 9,413 8,977 6,112
EPS** (Rs.) 5.4 7.3 3.6 3.8 2.1 3.5
(Rs. Million)
# Capital Employed = Net worth + Gross Debt + Other Long Term Liabilities
* Net Current Assets does not include Cash & Cash Equivalents
50
BALANCE SHEET TREND
Particulars 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 30-Sep-19
Net Worth 14,732 19,700 23,971 26,057 27,793 30,377
Short Term Loans 13,936 13,533 11,721 12,580 14,080 13,747
Long Term Loans 20,864 18,945 21,393 20,228 19,024 16,226
of which Welspun Flooring debt - - - - 2,870 5,288
Gross Debt 34,800 32,478 33,114 32,807 33,104 29,973
Cash & Cash Equiv. 4,321 1,388 2,725 2,538 2,821 1,990
Net Debt 30,479 31,090 30,389 30,269 30,283 27,983
Net Debt excluding Flooring debt 30,479 31,090 30,389 30,269 27,412 22,695
Average Capital Employed # 47,619 53,331 58,189 62,111 64,209 65,639
Net Fixed Assets (incl CWIP) 26,049 33,508 35,713 33,641 36,154 39,369
Net Current Assets* 17,630 16,845 20,114 23,734 22,210 20,979
Total Assets 58,960 65,491 73,283 72,249 77,423 79,386
1. ROCE = EBIT / Average Capital Employed; ROE = Net Profit / Average Net worth
2. Total asset turnover = Sales/ (Fixed assets + Gross current assets)
3. FY17 & FY19 Return Ratios figures adjusted for Exceptional item
4. ROCE (pre-tax) excluding Welspun Flooring is 11.5% for FY19 and 18.7% for H1FY20
5. P&L figures for H1FY20 have been annualised
Continuous Improvement in Net Debt/Equity
51
FINANCIAL RATIO TREND
FY15 FY16 FY17 FY18 FY19 Q2 FY20
Net debt/Equity 2.07 1.58 1.27 1.16 1.09 0.92
Net debt/EBITDA 2.23 1.85 1.83 2.51 2.64 1.81
EBIT/Interest 3.66 5.54 7.32 4.98 4.46 7.76
Current Ratio 1.12 1.15 1.41 1.42 1.25 1.24
Fixed Asset turnover 2.04 1.77 1.86 1.80 1.81 1.81
Total Asset turnover 0.90 0.90 0.91 0.84 0.84 0.90
Inventory days 76 68 70 79 75 65
Debtor days 40 52 53 56 60 56
Payable days 30 41 41 39 39 43
Cash conversion cycle 86 79 82 96 95 79
ROE 41.8% 42.8% 29.6% 15.4% 15.2% 24.0%
ROCE (pre-tax) 21.8% 24.6% 19.3% 11.3% 10.9% 16.8%Re
turn
rati
os
So
lve
nc
y
rati
os
Op
era
tio
na
l ra
tio
s
Board Approved Dividend Distribution policy
25% of standalone PAT to be the total payout (incl. dividend tax)
Consistent track record of dividend distribution
52
DIVIDEND POLICY
Period Standalone
EPSDPS
Dividend tax
per share
Payout
Percentage
FY15 5.09 1.05 0.21 25%
FY16 5.99 1.30 0.26 26%
FY17 3.05 0.65 0.13 26%
FY18 3.03 0.65 0.13 26%
FY19 1.41 0.30 0.06 26%
THANK YOU
53
For further details, please contact:
Harish Venkateswaran
AVP - Group Finance and Strategy
Email: [email protected]
Altaf Jiwani
Director (Finance) & CFO - Welspun India Limited
Email: [email protected]
